Improving the Housing Continuum

Community leaders discuss the root of Sarasota's attainable housing gap.

Most people living on the Gulf Coast want rental payments that fall somewhere between beach houses and public housing, but public dialogue seems always to center around the high-end or the almost homeless. As more leaders today seek out solutions for the underserved middle class, SRQ hosted an editorial symposium in September to discuss affordable and attainable housing with some of the region’s top experts.

SRQ: Clarify the differences in what we what we need for affordable housing as opposed to previous hot-button issues like sheltering the homeless?Jon Thaxton (Senior Vice President for Community Investment, Gulf Coast Community Foundation): It gets confusing and frustrating for folks. I like to say our community needs to provide for a continuum of housing to provide for its workforce and for its citizens, plain and simple. This continuum goes all the way from a single-wage-earner family of three that, because of young child, can only have one in the workforce, with that person at or near minimum wage. You need to provide housing for that cohort of individuals, and there are a lot of them in Sarasota—tens of thousands. You also have to provide housing for the very wealthy who need or prefer housing of a completely different type. So it runs the gamut. If a person is working diligently 40 hours a week at lawful pay, there needs to be housing provided, and that’s not what we are doing in Sarasota. We are providing for a particular income of housing upwards and not downwards. Harvey Vengroff (Developer, One Stop Housing): We’re not in the homeless business. We are in the housing business for people that have the ability to work or who are on disability. Our housing is basically low income, but surprisingly we have some people who are very rich living in some of our apartments. They live there because they have a sense of family. We have 1,600 apartments in the Sarasota area, and we have a waiting list to get an apartment. People who used to say their lease was up and they were going to move, those people now can’t move because there is no place to go, so we have a backup. Thaxton: The reason for that is people occupying the homes people need to move into can’t move because there is no place for them to move up. It’s like a staircase, and we’re missing the bottom five rungs of the stair. That sixth step is simply unattainable because there is no way to build equity.

What level of professional has trouble finding housing in this market? What do they need in terms of rents? Robert Young (Government Issues Chair, Young Professionals Group): We did a survey of our members last October. It seemed like people expect $600 to $1,000 [per month] when looking in this area. We did a follow-up survey about the Rosemary District to find what people were looking for there. The majority of people were looking for somewhere close to work and maybe some parking for their car. They weren’t asking for a lot of amenities. They weren’t anticipating granite countertops or the things that go into luxury condos. A majority of people surveyed work downtown and live in Lakewood Ranch, so that’s a commute every day. On Fruitville [Road] or University [Parkway] that makes for a 15- or 20-minute drive for most of the things our demographic likes doing; they like to work and play downtown. And people were willing to pay a little bit more to be close to downtown. Thaxton: It’s ridiculous to have the same parking requirements for a housing type that allows a person to park, ride a bus or have a short travel distance to work. But it’s the way the code is written today and one of the biggest problems developers face. The codes are making the assumption every household is going to have two cars and that’s just not a reality. Vengroff: Forty percent have no cars. Also, more traffic means you need more parking when you get to downtown. Thaxton: Not only do we need more parking but think just about lane miles consumed by the cars on the roads at those peak traffic times. Try to get out of Sarasota in the middle of March at 5 o’clock heading east on Fruitville Road. You can walk faster.

How are building codes impacting the problem for developers? Mr. Vengroff, you just had a project approved near downtown.Vengroff: We still have to go back to the city for zoning and parking. It will be a year before I put a shovel in the ground. Speaking as a builder who doesn’t take subsidies, we have land in several locations. On Old Bradenton Road, we have eight acres that abut up to Water Tower Park. We bought that 11 years ago, with the intention of building 30 condominiums or apartments, and we own 150 apartment units adjacent to that on the same block. But every time we went to a public hearing, some of the neighbors said those homes are going to be too cheap, and they say, “We want something much bigger and more expensive so our houses are worth more.” Thaxton: There is a lot of talk about density restrictions and impact fees. They are a problem. Don’t get me wrong, we need to reduce the burdensome codes on some of these types of housing. But we know impact fees don’t affect the price of most homes. If you take away a $7,000 impact fee on a $450,000 home, the price of the home is still going to be $450,000. However, once you get into the truly lower-income housing, it can affect the price of the home and we do need a funding source available to subsidize those impact fees. We need to take a serious look at density. We are not going to find a solution to this problem in the absence of building more multi-family housing. This problem is not going to be cured by building single-family detached homes. Vengroff: We can take an old hotel and convert it to a studio apartment for about $25,000 to $26,000 per apartment and that works well in most areas. In Sarasota, it doesn’t because the city is really against that, and it creates so many obstacles. We have been working on Oak Ridge Apartments for two years, and I don’t have certificate of occupancy on it because the arborist hasn’t been able to find a nursery with 12 trees that have a certain circumference. That’s keeping me from getting a certificate of occupancy, and that’s keeping me from getting financing on building. It’s a lot of stupid stuff. Would a three-quarter-inch stem on a tree be more important than housing somebody that’s living in their car?

Explain why neither the public nor private sector is responding to this demand. Why is it so hard to get a permit if there is demand for this type of housing, and why aren’t landlords putting in lower rents?Vengroff: It’s more profitable to get the higher rent. If you looked at our typical apartment, like at the Palms of Sarasota on Old Bradenton Road, we have townhouses, two bedrooms, two baths and they have a backyard, a community pool—it’s a gated community. Normally you get $1,500 or $2,000 for that. We are getting $900. If you think about the economics, if I as a contractor-builder were going to build on property on Fruitville Road that is now zoned for 25 units an acre, and if I wanted to build on eight acres over there, that 25 units per acre will build 200 condominiums, and I could sell them for $300,000 or $400,000 each, I would be better off financially doing that than going through a 10-year process trying to get a rezone so you can get 50 units per acre and build apartments with rents for $600. Thaxton: The cost for building the higher-risk units is more. You are paying more money to borrow there than you would building three-bedroom, two-bath homes in a gated subdivision. It’s going to take you longer to get government approval and you are going to have to face neighborhood opposition. I don’t blame developers for this when they can get faster approval, cheaper money and higher profits for going to this product than to going to the alternative product. The market itself has created this, and frankly, selling these gated community homes and luxury condominiums is like catching a can of corn. It’s really pretty easy to do. Building functional rental apartment complexes is very difficult. In [unincorporated] Sarasota County, we only had one in 10 years, and that’s The Springs at Bee Ridge. And we built as many rental apartments in that one complex at one time than we had done in the last nine years in Sarasota County combined.

So we end up with a gap where we tackle only the lowest income housing and serve only the highest market demand. What is the consequence of ignoring the middle segment of the market?Thaxton: A lot of the lower-end housing gets filled by Robert’s housing type. But let me tell you, if you want to diversify the Sarasota economy, to get away from a service-based economy and more toward an innovation-based economy, you cannot do it without these young people that have growing families and entrepreneurial minds. Not having housing for them is equally as big a problem as not having service workforce housing. Young: We know 95 percent of our members are college-educated and all full-time employed. Ours is probably higher than that initial threshold for housing, but there is a gap where we can’t go too high. We can’t afford $2,000 a month, and there is nothing between $1,000 and $2,000 a month. It’s a steal if you can find something like that, and there is a housing scarcity for that range. And if you are constantly looking for another place that is a little more affordable, then you are constantly moving. I’ve moved three or four times in three years. Moving has a lot of cost built in as well. The real danger for young professionals is if we don’t have enough to keep people here, that makes it just as easy for them to move somewhere else instead that may be more attractive in terms of jobs or any other number of factors. Why not move over to St. Pete or a different place?